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1H18 results: Admiral Plc.

UK motor and home insurance Group Admiral Plc. reported a better-than-expected 1H18 rise in pre-tax profit (+9% YoY) to GBP211mn – above a company-supplied forecast of GBP207.8mn. EPS increased 8% YoY from GBp57.3 to GBp61.6, broadly in-line with the increase in pre-tax profits. Turnover jumped 14% YoY to GBP1.66bn, reflecting a 14% YoY rise in total customer numbers to 6.23mn.

The firm said that the higher 1H18 profit was due to growth in its core UK motor-insurance business which posted an advance in profit from GBP224.2mn to GBP249.5mn, despite poor weather hurting its household insurance unit. Admiral’s UK household business swung to a GBP1.9mn loss due to what the company described as “harsh winter weather”. The firm recorded reduced losses in its international-insurance businesses of GBP0.6mn (significantly improved from the GBP10.1mn loss in 1H17), whilst growing combined turnover by 17% YoY to GBP260.1mn (vs 1H17’s GBP221.9mn) and increasing customer numbers also by 17% YoY to 1.12mn. The European insurance businesses recorded a profit of GBP2.5mn in the period under review vs a 1H17 loss of GBP5.0mn.

Admiral also said it has selected Madrid for its post-Brexit European Union (EU) base. The company has applied for Spanish licences for different parts of its business and indicated that these entities would be operational by the start of next year and the cost of the restructuring would not be material. In its results presentation, Admiral flagged potential risks if the UK came out of the EU without a deal but noted that it did not expect its daily operations to be negatively impacted by Brexit. Outside the UK and Spain, Admiral also operates in France, Italy and the US.

Admiral declared an interim dividend of GBp60.0/share (+7% YoY), comprising of a GBp40.8 normal dividend and a GBp19.2 special dividend. Admiral also said that its Solvency II ratio (a measure of capital strength), stood at 196% after including the dividend payment, down from 205% at the end of 2017.

The company’s share price is up 2.7% YTD and rose 4.3% WoW on the back of the positive 1H results.



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